Tax aggressiveness, an important issue in corporate business, reflects a company's strategies to minimize tax liabilities, which often border on legal and ethical boundaries. This behavior has significant implications for tax authorities and financial regulators. The prevalence of creative accounting in global financial markets is especially pronounced in the Asia-Pacific region, with financial reports reflecting the firm's management to optimize resources. This study investigates the impact of firm specific characteristics and audit quality on corporate tax aggressiveness among Malaysian industrial firms between 2016 and 2021. To measure tax aggressiveness, this study relies on effective tax rates (ETRs). Using panel data methodology, this study analyzes 522 firm-year to achieve the research objectives. Consequently, our findings reveal that audit quality, firm performance and firm size demonstrate a high propensity for tax aggressiveness. However, firm leverage does not have any significant influence on tax aggressiveness. The insights from this study offer valuable guidance for financial regulators and tax authorities seeking to comprehend the interplay between financial and tax reporting decisions. Additionally, the study provides theoretical support for agency theory by showing that external monitoring, represented by audit quality, is required to reduce corporate tax aggressiveness.

Keywords: corporate tax; tax aggressiveness; audit quality; effective tax rate JEL: H2, L6, M4